State-owned Bharat Electronics Ltd, an aerospace and defence electronics company, has seen its stock appreciate by 37.31 percent compared to the broader index which has gone up by a mere 1.47 per cent in the past year. The growth has come against the backdrop of an improving order book and a robust balance sheet, according to analysts.  

BEL share was trading at ₹98.82 on the BSE on Friday, up from ₹71.92 a year earlier. While the company did not respond to a businessline questionnaire as it is in the silent period ahead of its quarterly and FY23 numbers, analysts say that it has benefited from strong order inflow as well as robust execution. 

The company’s order book, stood at ₹60,500 crore, providing revenue visibility of 3.5 years. The near- to medium-term order pipeline is estimated to be between ₹60,000 and ₹70,000 crore, which is encouraging for the company’s growth, Sharekhan noted in a recent report.  

Some major orders acquired during the year include Himashakti, Medium Power Radar (Arudhra) for ₹2,800 crore, Air Defence Control and Reporting System (Akashteer) for ₹2,000 crore, Lynx U2 systems, EW Suite for MLH Upgrade, DR118 for Su-30, Weapon Locating Radar (WLR), SARANG ESM, and several others.  

Ministry of Defence (MoD) has signed over 16 different contracts worth ₹16,240 crore with Bharat Electronics (BEL) of which four are for the Indian Air Force (IAF), four are for Indian Army (IA) and eight are for Indian Navy (IN). The PSU, which is also scaling up its contribution from exports, has acquired export orders worth $75.66 million.

Currently, exports account for about 2 per cent of the company’s overall revenue, with long-term plans to increase that to 10 to 15 per cent.  

The major orders expected in FY24 include the Quick Reaction Surface-to-Air Missile (QRSAM) worth ₹20,000 crore and the Medium Range Surface-to-Air Missile (MRSAM) worth ₹15,000-20,000 crore, according to an ICICI Securities report. During the third quarter of FY23, BEL’s quarterly revenue increased by 24.46 per cent y-o-y to ₹11,005 crore from ₹8,842 crore in the corresponding quarter last year. In comparison to the same quarter the previous year, its PAT increased by 35.97 per cent y-o-y to ₹1,641 crore up to Q3, from ₹1,207 crore.  

Revenue growth

Moreover, the guidance for the revenue growth for the next two years is in the range of 15 to 20 per cent for the next two years, the company had said during the Q3 FY23 investor call. 

“There are two aspects for targeting double-digit growth: growth in the defence market and our diversification, our expansion in other areas, the civilian market as well as exports, so we are working in all three aspects. We are leveraging our knowledge and expertise in the defence field to further enhance and diversify the civilian field,” the management had said in an earlier commentary on future performance and outlook. 

Similarly, the company aims to increase the share of non-defence verticals like civil, railways, and metro rail in total revenues. However, the company has projected that for the next four-five years, the ratio of defence to civil is expected to continue in the range of 75:25 or 80:20, with defence continuing to contribute majority of growth.  

BEL has also announced a capex of ₹600–800 crore in FY23/FY24. In addition to the regular capex, the company is developing a defence system integration complex in Nagpur. It is building an arms and ammunition facility for ₹200 crore in Hyderabad and an advanced night vision factory at Nimmaluru, Andhra Pradesh, for ₹340 crore.  

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